Marvel Parts, Inc., manufactures auto accessories. One of the
company’s products is a set of seat covers that can be adjusted to
fit nearly any small car. The company has a standard cost system in
use for all of its products. According to the standards that have
been set for the seat covers, the factory should work 1,040 hours
each month to produce 2,080 sets of covers. The standard costs
associated with this level of production are:
|
|
Total |
Per Set |
|
of Covers |
|
Direct materials |
40,560 |
$ 19.5 |
|
Direct labor |
$ 7,280 |
$3.5 |
|
Variable manufacturing overhead |
$
4,160 |
2 |
|
(based on direct labor-hours) |
|
|
|
25
(total) |
During August, the factory worked only 600 direct labor-hours
and produced 1,800 sets of covers. The following actual costs were
recorded during the month:
|
Total |
Per
Set
of Covers |
| Direct materials
(5,000 yards) |
$ |
34,200 |
$ |
19.00 |
|
| Direct labor |
$ |
6,660 |
|
3.70 |
|
| Variable manufacturing
overhead |
$ |
4,140 |
|
2.30 |
|
|
|
|
$ |
25.00 |
|
|
At standard, each set of covers should require 2.50 yards of
material. All of the materials purchased during the month were used
in production.
| Compute the materials price and quantity
variances for August (completed) |
|
|
|
| Materials price variance |
$4,800 |
F |
| Materials quantity
variance |
$3,900 |
U |
|
Compute the labor rate and efficiency variances for August.
(Input all amounts as positive values. Indicate the effect
of each variance by selecting "F" for favorable, "U" for
unfavorable, and "None" for no effect (i.e, zero
variance).)
|
|
|
|
| Labor rate variance |
$ . |
U |
| Labor efficiency variance |
$ . |
F |
Compute the variable overhead rate and efficiency variances for
August. (Input all amounts as positive values. Indicate the
effect of each variance by selecting "F" for favorable, "U" for
unfavorable, and "None" for no effect (i.e, zero
variance).)
|
|
|
|
|
|
| Variable overhead rate
variance |
$1,740 |
U |
| Variable overhead efficiency
variance |
|
F |
|
|